“The Public-Private Investment Program [PPIP] is a really bad program. You’re really bailing out the shareholders and the bondholders. Some of the people likely to be involved in this, like Pimco [Pacific Investment Management Co.], are big bondholders.

-Joseph Stiglitz


First Krugman, now Stiglitz; let’s call it “When Nobel Prize winners agree with Barry” day.

Over the past few months, I have criticized CEA director Lawrence Summers “Sacred Cows/Save the Banks” approach, rather than a save the financial system approach. And the mad attempts to bailout the bond holders also came in for some harsh words. Joseph Stiglitz agrees:

The Obama administration’s bank- rescue efforts will probably fail because the programs have been designed to help Wall Street rather than create a viable financial system, Nobel Prize-winning economist Joseph Stiglitz said.

“All the ingredients they have so far are weak, and there are several missing ingredients,” Stiglitz said in an interview yesterday. The people who designed the plans are “either in the pocket of the banks or they’re incompetent.”

The Troubled Asset Relief Program, or TARP, isn’t large enough to recapitalize the banking system, and the administration hasn’t been direct in addressing that shortfall, he said. Stiglitz said there are conflicts of interest at the White House because some of Obama’s advisers have close ties to Wall Street.

“We don’t have enough money, they don’t want to go back to Congress, and they don’t want to do it in an open way and they don’t want to get control” of the banks, a set of constraints that will guarantee failure, Stiglitz said.

The return to taxpayers from the TARP is as low as 25 cents on the dollar, he said. “The bank restructuring has been an absolute mess.”

Rather than continually buying small stakes in banks, weaker banks should be put through a receivership where the shareholders of the banks are wiped out and the bondholders become the shareholders, using taxpayer money to keep the institutions functioning, he said.”

I wonder what will happen if or when the public realizes the enormity of the theft that has taken place right out in plain view, before their very eyes. Don’t know? Don’t care? Sheeple? I simply don’t get the complacency . . .

The other issue according to Stiglitz is also something we’ve touched upon: “America has had a revolving door. People go from Wall Street to Treasury and back to Wall Street. Even if there is no quid pro quo, that is not the issue. The issue is the mindset.”

I could not agree more . . .


Larry Summers: Wrong Man for the Job (April 4, 2009)


Why Creditors MUST Suffer Also (April 5, 2009)


Stiglitz Says White House Ties to Wall Street Doom Bank Rescue
Michael McKee and Matthew Benjamin
April 17 (Bloomberg)


Category: Markets

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

80 Responses to “Stiglitz: Blame Summers

  1. pbr90 says:

    What can anyone expect from a person who cannot see the forest for the trees?

    It’s obvious by now that Summers is among the most spacially challenged among us – by his comment at Harvard.

  2. call me ahab says:

    excellent post- Stiglitz nails it.

  3. Steve Barry says:

    The public only seems to care about their 401k statements, so they are feeling better. The public is very, very stupid as a whole to be led to where we are right now. They have little financial accumen…the founding fathers warned about all this, to no avail.

  4. dead hobo says:

    Perception counts as much as facts a lot of the time.

    A few months or weeks ago when it looked like the world was ending, it would have been stupid beyond belief to shut down large banks. The panic would have grown exponentially. Nothing good would have come out of it.

    Now that the market indexes are up a little and analyst expectations have been soundly beat (surprise!, as in “only an idiot would be surprised” ), the economy can afford a few hits without those hits creating an exponential panic. If shutting down a parasite bank is a good idea, then go for it. I’m for it if for nothing other than to see the looks on their faces.

    I’m particularly troubled that the best profits at some banks were made at the trading desks, aka speculating on the stock market or other markets. The old Wall Street is back. Had those “Investments” gone bad then would Uncle Stupid have to pay twice?

  5. rww says:

    “Don’t know? Don’t care?” People do know and do care. The problem is that Barack was our best hope to break the oligarchy and he turned out to be a card-carrying member. The result is “know and care” to the point of despair.

  6. dead hobo says:

    How about posting an open thread where readers can post their explanations about “Why Business Reporting On Television and elsewhere Is Frequently So Bad”?

    I just made the rounds. Fox Business and Bloomberg both sounded rather professional. CNN was all a tizzy about how losing less than expected was good news or dismal profit are good news if they beat analyst’s expectations. The CNN business reporter tried to explain it to the anchor. The anchor appropriately made confused faces. CNBC was blathering about short squeezes, implying Up, Baby, Up! Nobody talks about missing months, although in fairness I only watch business TV a little. Mostly none have mentioned that trading profits are basically empty calorie profits as far as the economy is concerned. Trading profits are basically transfer payments. Nothing is created.

    I doubt most people fall for these idiot’s blather any more. It is still annoying to hear blatant ignorance and stupidity passed off as good information.

  7. jnutley says:

    I’m beginning to get a different idea about this mess. In this month’s Wilson Quarterly there’s a review of an article in First Things: “The Return of the Best and the Brightest” by R. R. Reno. The gist is that we have a modernized (Politically Corrected?) version of the JFK staff in the White House; a group of mostly Ivy Leaguers who all have impressive academic credentials and a collegiate (Good ‘Ol Classmate network?) mindset.

    So Obama supports Geithner and Summers and they support the CEOs of the Banks because they’re all part of the “In” crowd. Outsiders claiming that Insiders should be cast out are going to be ignored; not just as long as possible, but until there literally is no alternative. It’s inconceivable to them that one of their own should be removed for anything short of obvious genocide, so the calls for “making hard choices” are going to get no traction, and only a massively face saving group-think 180 (on the part of the new Best and Brightest) is going to change the Nation’s course.

    So it’s not malfeasance or even sloth based nonfeasance but blind loyalty that’s preventing us from doing what needs to be done.

    Please tell me I’m deluded!

  8. DL says:

    “I wonder what will happen if or when the public realizes the enormity of the theft that has taken place right out in plain view, before their very eyes. Don’t know? Don’t care? Sheeple? I simply don’t get the complacency”.

    I think that the average “J6P” doesn’t pay close attention to the ins and outs of the bank bailouts. The average Joe just cares about whether he has a job, or whether he has customers (if he owns a small business).

    Furthermore, Obama has most of the J6P’s convinced that the wealthiest 2% of Americans will be paying for everything anyway. Of course, there’s no way that this is going to be true, but the average Joe won’t realize that until sometime after November 2012.

  9. Hal says:

    old Tv show–Baretta–Robert Blake

    ” if you can’t do the time, don’t do the crime”

    if you cannot withstand a loss do not invest.

    These folks have taken risk out of the equation on selective basis.

    We all now the issues and problems with what is happening and our so called leaders–before republican-now democrats-just stick it to the general public.

    the question is when do the rank and file middle class (which includes millionaires) wake up and protest. That tea party was a very small minority–if the people do not speak up in big numbers all the moaning on internet boards means nothing. Just a way of getting our feelings off our chests.

  10. batmando says:

    rww Says: at 9:34 am
    “Don’t know? Don’t care?” People do know and do care.
    Agreed and…., they feel helpless and hapless with no idea how they can affect the action in DC. After all, a lot of us faxed/emailed/phoned our clueless Senators and Reps back last fall opposing TARP 300:1 and where did that get us?
    What education/training exactly has Obama had in economics/business? I suspect jnutley has it about right. O is relying on a “brain trust” who filter out the alternative takes and options, and solutions.

  11. Paul Jones says:

    The complacency stems from the fact that most people are themselves on the dole or engaged in one kind of scam or another.

  12. batmando says:

    @ Paul Jones
    Too cynical by half, and….., BS

  13. dave says:

    While I agree 100% with Stiglitz and am angry by the complacency of the U.S. citizenry, it’s (unfortunately) understandable. The average citizen does not follow the banking industry that closely. What’s more discouraging is it seems that the MSM, our elected officials and other national influence makers don’t seem to care either. In my opinion, when it comes to this banking bailout, Obama is Bush in sheep’s clothing.

  14. dead hobo says:

    Paul Jones Says:
    April 17th, 2009 at 9:52 am

    The complacency stems from the fact that most people are themselves on the dole or engaged in one kind of scam or another.

    Stealing anything that isn’t nailed down is the American Way. Being nailed down means it only takes a little longer to steal . The challenge is being able to talk your way out of being in trouble or to make someone else subsidize your theft. Woosies get caught.

  15. number2son says:

    I disagree that people don’t care or are somehow corrupted. Most are simply not informed about the enormity of this problem. If you are desperate to find a job, for example, do you have time to think about what is going on in Washington or on Wall Street?

    And tea parties are nice, I suppose, but not my cup of tea (particularly when they come freighted with so much right-wing nonsense). But we can lobby our congress people in our common interest as Americans, to never stop reminding them that our leaders must do what is right for us all, and not what is merely expedient for their friends on Wall Street.

  16. franklin411 says:

    When economists talk more about morality than they do about numbers, I call bullshit. Stiglitz was shunned from the administration for the same reason Krugman was: he’s a pie in the sky/ivory tower dreamer with no understanding of, or tolerance for, political reality.

    I’m sorry to see Barry lining up with the Stiglitz/Krugman-outrage crowd.

  17. larster says:

    No one stood up against the Cheney/Bush torture policy. No one in the military stood up against the Rumsfeld plan, or lack thereof, for the Iraq occupation. How can anyone be surprised that people do not rise up against TARP, PPIP, etc., ?

  18. call me ahab says:

    @ larster

    good points

  19. Moss says:

    They are trying to buy time. Like spreading soft butter on a piece of bread they want to smooth out the bumps. It looks like things have stabilized for now. After GM goes out and some more time passes we shall see what comes of it. Looks like CITI is buying back a lot of their own bonds.

    @Paul Jones: Right you are about that.

  20. call me ahab says:


    don’t you understand- we all like to talk to each on this forum about why we have it all figured out- why you keep pissing on our Post Toasties (j/k)

  21. Myr says:

    “what will happen if or when the public realizes the enormity of the theft that has taken place right out in plain view”

    They won’t realize what’s happened until the market plummets to new lows and the Fed needs it’s own bailout. Then they’ll rightly blame Obama. I voted for the guy, but he’s incapable of making tough decisions and this will cost him(and us) dearly.

  22. some_guy_in_a_cube says:

    Over a period of decades, policy makers constructed a financial system around a few giant corporations with massive risk exposure backed by a taxpayer put. That system crashed (duh!). So what is the solution? Rebuild it, of course!

  23. Steve Barry says:


    You are one of “them” if you don’t yet realize that this “crisis” is not actually a black swan, but a necessary conclusion to a 50 year long debt binge. Once you realize this, you won’t think it is right to blame Obama. Do you blame a doctor who tries to revive a massive coronary victim and fails?

  24. leftback says:

    Stiglitz will be part of Team B, when Congress gets the message that we need Clean Hands.

    Chris Whalen was on Bloomberg this morning with Betty, talking about C’s earnings, and was especially amusing on the subject of their trading gains. “It’s not investing, it’s speculation”. Betty bit her lip tenderly as Chris said that C is “essentially insolvent”, then when Chris said “bifurcation in the banks” I’m sure she was panting with excitement. Amazing what a vocabulary can do.

    Barry: Ever wonder WHAT the trade was that all the IBs must have put on at the same time, that made them all money? Short the SPOOS in Jan/Feb, long the SPOOS in March? Long TLT the minute before Bernanke went ALL-IN with the Fed buying long bonds? So, is this market jobbed or what?

  25. Mannwich says:

    @franklin411: So your outrage over the Bush admin’s failures were justified but our outrage, and anyone else’s, over the O administration’s shortcomings/failures are not? I see how that works. Seems you’re a kool aid drinking “true believer”. Some of us are not.

  26. flibby says:

    I wish there was something I could do, that could be heard. I’m a democrat and I’m outraged. My friends are Republicans and Libertarians and they are outraged. We all called in to our Texas senators for TARP. I think opinion was running 300:1 against TARP. Several trillion dollars later…

    The american tax payer isn’t as dumb as people think, we are just utterly helpless to change anything. Ask anybody on the street if we should continue to support citibank. The majority would say shut it down. We did the best we could in elected the guy of change, but got mostly the same.

  27. Mannwich says:

    @leftback: But the more important question is how did Betty look when she bit her lip? Sorry I missed that. Sorry, couldn’t resist. I’ll move along now.

  28. Mannwich says:

    @leftback: Guess what move is next for the IB’s after this latest “rally” peters out? Short the SPOOS in May-July/August? That’s my bet.

  29. call me ahab says:

    some_guy_in_a_cube Says:

    “policy makers constructed a financial system around a few giant corporations”

    I remember when I was in college getting my degree in “High Finance” in the early 1980′s the talk was that US banks were too small and were being eclipsed by the likes of Deutsch and Mitsubishi- boy-

    fixing that sure worked out well.

  30. Mannwich says:

    It looks like the IB’s are taking TARP money and trying to gamble their way out of this mess. That’s what it seems like to me. All of them had “strong trading profits” this past quarter. Wonder what BAC will report?

  31. franklin411 says:

    I like oatmeal…and if I’m being bad…oatmeal with a chocolate donut! =)

    But seriously. Am I the only one who recognizes reality here? Even Stiglitz (who has an axe to grind with the administration because they failed to pay sufficient homage to him) admits that *what he wants is impossible.* However, he refuses to factor this into his thinking:

    “We don’t have enough money, they don’t want to go back to Congress, and they don’t want to do it in an open way and they don’t want to get control” of the banks, a set of constraints that will guarantee failure, Stiglitz said.

    NO SHIT SHERLOCK! Wow…he JUST figured out that Congress isn’t going to spend another nickel on the banks? He JUST figured out that Congress has no stomach for a 1-3 month long period in which the entire global economy is flipped upside down, turned inside out, and shaken till it’s dead?

    Ya know, it’s awfully easy for all of you to sit back in your armchairs and rail about right and wrong. Barry, Stiglitz, Krugman, and probably many of you are independently wealthy. You don’t have to worry about putting bread on the table. You don’t have to worry about having a job today. You don’t have to worry about where you’re going to sleep tonight.

    Well, I wish I knew what that felt like. But I don’t. Those of us who survive day to day don’t have the luxury of picking at our navels until we find the PERFECT solution. I suppose it’s the job of academics (and others who live in a bubble of economic security, like Barry) to theorize and hypothesize about what a perfect world would look like. Most of the rest of us are just busy trying to pay the rent.

  32. number2son says:

    When economists talk more about morality than they do about numbers, I call bullshit

    A classic example of projection.

  33. Mannwich says:

    @franklin411: Your rationalizing sounds eerily familiar to the true believers’ constant defense of the Bush administration at all costs. Wonder where that got us?

  34. Mannwich says:

    @franklin411: “You want me on the wall, you NEED me on that wall! You want the truth? You can’t handle the truth!!” Is that what you’re saying? LOL.

  35. drollere says:

    i think too many people have access to the president, either directly or via intermediaries such as axelrod, for white house policy to be “captive”. i still prefer the hypothesis, also put by dead hobo, that the response is measured on a political tempo except when a crisis (AIG, fannie/freddy, corporate credit) intervenes.

    the fact that TARP can’t recapitalize the banks should be taken for what it is — a sign that TARP is not intended to recapitalize the banks. bondholders and management are still protected. my conclusion is that the administration wants to build a bridge of bandaids to carry the institutions along until they can “grow out of” their capital problems, or carry them long enough so that failures do not come in a panicking flurry. baby jesus will sort out the blame.

    on cable financial news … it’s intriguing first to listen to kudlow, or cramer, or the fastmoney crack babies, and then switch over to BP or Zerohedge. today, in fact, zerohedge carries an “open letter” on hedge fund positions in rallying weak stocks, and concludes “At this point, it is hard to say what set off this process, but it is currently accelerating and feeding on itself.” this is what i call a “fractal hypothesis”. it replaces human agency with the mystery of a “process”.

    what happens if you look further into a fractal, hoping to find an end to complexity? just more complexity. what happens if you look further into a process, hoping to find human agency? just more process. as laurie anderson sang, “there is – no – pilot.” nobody knows how this process works. nobody can predict its movements. where’s that “rising wedge” plummet in equities i keep hearing about? who is worse off or stupider here — the guy who writes an open letter asking why his deeply technical analysis doesn’t pan out, or the guy who sits on tv reading a teleprompter? which of them has the worse understanding of the process they describe?

  36. franklin411 says:

    Politics is the art of the possible.
    Otto Von Bismarck, Aug. 11, 1867

    Just then they came in sight of thirty or forty windmills that rise from that plain. And no sooner did Don Quixote see them that he said to his squire, “Fortune is guiding our affairs better than we ourselves could have wished. Do you see over yonder, friend Sancho, thirty or forty hulking giants? I intend to do battle with them and slay them. With their spoils we shall begin to be rich for this is a righteous war and the removal of so foul a brood from off the face of the earth is a service God will bless.”

    “What giants?” asked Sancho Panza.

    “Those you see over there,” replied his master, “with their long arms. Some of them have arms well nigh two leagues in length.”

    “Take care, sir,” cried Sancho. “Those over there are not giants but windmills. Those things that seem to be their arms are sails which, when they are whirled around by the wind, turn the millstone.”

    –Don Quixote, by Miguel de Cervantes — 1615

  37. Mannwich says:

    @franklin411: Sometimes the naysayers are right and outrage justified. Keep that in mind.

  38. Chief Tomahawk says:

    Keep up the good work/watchful eyes, BR!

  39. Bruce in Tn says:


    The National Debt is $11.2 Trillion! Updated 16 April 2009.

    Will we make it 1/1 by year end? I think so! We’ve rounded the far turn and going into the homestretch we are pulling away!

    He’s going to to the whip!

    No one in the grandstands expected a race like this! Man o man, can that guy spend money…

    Unfortunately for those holding the winning two dollar tickets…your winnings go to the jockey,,,better luck next race..

  40. call me ahab says:

    dr. franklin Says:

    ‘Am I the only one who recognizes reality here?”

    The all knowing, all powerful- franklin?- i think i saw you in a movie- with munchkins

  41. franklin411 says:

    @ Mannwich:

    “by stubbornly refusing to compromise upon things which are right, one may often do a vast wrong.” — William Allen White, March 20, 1920.

  42. post 10:30 on options expirations usually reveals the markets conscience.

  43. Mannwich says:

    @ahab: Franklin’s just warming up for his class but his “students” here at TBP aren’t as young, wide-eyed, naive, and easily moldable as his real students will be in the classroom.

  44. cjcpa says:

    Re: Obama, his vote on FISA was unfortunately– very telling.

    Above said that he can’t make the tough decision. I know that he can, but chooses not to.
    This is his political judo. I personally hate it. I have been told I have no future in politics.

    There have been many rants against Bush, politics, etc. over the years.
    One I remember recently is the political army general as anathema to the grenade wearing, tough talking army general. I forget the latter’s name, but Petraeus is the former. It is somehow, now, with all the politically correct requirements, hedging of words, etc. required that we not upset the cart.

    That is why I have been getting my news from blogs for 4 years now.

    back to FISA.
    Obama will not call a bankrupt bank ‘bankrupt’. he’s not like that.
    I don’t like it, but it’s the political reality. and I hate that too. You have to play for the middle to get over half the votes. Must stay middle of the road.

    I disagree with Franklin, but he is right to say that political reality is a factor.
    It doesn’t matter what is right. It matters what they can pass in Congress. Often not even an overlapping set of choices.

    Yes, I rant into the blogosphere to no avail.

    I marched in protest in NYC in 03 before the Iraq misadventure. Nobody listened then either. and it was cold and uncomfortable…. I told everybody who would listen that it would kill a lot of people and cost a lot of money…. nobody cared. Then I told my reps by email and fax. ((never get involved in a land war in Asia.) Didn’t make a difference. Then Control of Congress was changed in 06. and nothing changed. New President…. not much has changed.
    Why do I bring this up?
    Approach to banking bothers you? too bad.
    Change means you get a guy with a bigger vocabulary.
    They are still not going to do what you want.

  45. Mannwich says:

    @franklin411: But who’s unwilling to compromise or yield to any opposing view that may be at least somewhat right/helpful at this point? It sure seems like it’s Summers/Geithner to me.

  46. cjcpa says:

    flibby got me going…..

  47. franklin411 says:

    @Mannwich and all:
    Look, you want nationalization? Fine.

    Tell me how you’ll get it through Congress.


  48. Mannwich says:

    @franklin411: I think you get it through Congress rather easily if we stopped throwing taxpayer money at these banks and there was no other alternative, which would be the case.

  49. call me ahab says:


    dude- you need audio for that “crickets” line to work

  50. franklin411 says:

    Exactly. It would take a 1933-scenario to accomplish something like bank nationalization. And we *never got to 25% unemployment with thousands of bank failures*. This is not 1933.

    And don’t forget…letting the banks fail is not just a theoretical exercise. It would have very real consequences for millions of Americans. The aftershocks around the world would cause millions to lose their assets, millions to be thrown out of work, and probably tens of thousands of innocents would die.

    We’ve already had a wave of “recession massacres.” Think about that.

  51. Stuart says:

    “The other issue according to Stiglitz is also something we’ve touched upon: “America has had a revolving door. People go from Wall Street to Treasury and back to Wall Street. Even if there is no quid pro quo, that is not the issue. The issue is the mindset.””

    Bulls Eye. One and the same they are. Add some compliant MSM, lazy headline writers, a smooth talking administration, voila … sheeple. When it hurts enough, they’ll wake up.

  52. Bruce in Tn says:

    since every other form of government in the good ole usa has to balance the budget each and every year, the ONE big idea is still…..A balanced budget amendment to the constitution….

    The time has come….does anyone anywhere think congress will do this yearly on their own?

    If this had taken place years ago, there wouldn’t be speculation about very high tax rates vs default…..how did we ever get in this mess….

  53. Transor Z says:

    @drollere: baby jesus will sort out the blame.

    To that I can only respond:

    “Dear 8 pounds, 6 ounces baby Jesus, new born, not even spoken a word yet. ”

    “Dear Lord baby Jesus, we thank you so much for this bountiful harvest of Dominos, KFC, and the always delicious Taco Bell. I just want to take time to say thank you for my family. My two sons, Walker and Texas Ranger, or TR as we call him. And of course my red hot smokin’ wife Carley, who is a stone-cold fox.”

  54. Mannwich says:

    @Bruce: It’s not gonna happen. How do you think we’ve achieved this “fake prosperity” over the past 30+ years? It wasn’t by actually paying for things as we go. It’s not the American Way. Free lunches for everyone are….

  55. call me ahab says:

    @ TransorZ

    LOL- Ricky Bobby had it all figured out- when you got that- what else you need?

  56. wally says:

    Is there really any way out of the situation we are in without extreme disruption?

    We are now in a period of suspended belief. We accept that the ‘kick-the-can-down-the-road’ plan really solved the problems and that now we don’t have to confront them. We have spent a trillion or two to get here.
    Now what?

  57. ben22 says:


    With this:

    I simply don’t get the complacency . . .

    Of course YOU don’t. Of course most of the people here don’t. BR, who do you spend your time with? Dummies, lazies, people that spend most of their time watching tv? people that work the line at GM or Ford? Nope, you hang with economists, money managers, analysts (people that ARE paying attention, that DO know what’s going on and actually CARE), and my guess is your friends that aren’t in the biz, they aren’t stupid, they are educated, they look into things.

    I’m not trying to rude, by I honestly think, many people in this country, when it comes to anything money, they are stupid. I say this because it’s not like they can’t learn, they just don’t want to. It’s not fun for them because there often isn’t an immediate reward.

    If the public ever finds out, they won’t do anything, they might have some short term, typical knee jerk reactions, but that’s about it IMO.

    Steve Barry, got it right, almost, when he said the public has little financial accumen, I think we he meant was, in general, they have none.

  58. vaughn says:

    “I wonder what will happen if or when the public realizes the enormity of the theft that has taken place right out in plain view, before their very eyes.”

    i wonder.

    i know what MANY people who DO have their eyes open would like to see happen…..
    The oligarchical DC/BANK kleptocracy that america seems to have become IS revolting after all….

  59. ben22 says:


    one more thing. Dead hobo is correct with the comment about perception IMO, and this is why, even if the public does find out they won’t do anything, if it seems like things are better when they actually do find out they will only say.

    “nothing I can do about it now” “at least my 401k is heading in the right direction”

  60. ben22 says:

    RE: Political Reality.

    didn’t Rahm say something along the lines of

    “how many bills has he passed”

    when Krugman was saying what they did wasn’t enough. That should tell you about all you need to know. BR, guys like you and Krugman, Stiglitz, etc. You are always going to be on the outside looking in.

  61. Mannwich says:

    ben222 and steve barry (and dead hobo) are right. It’s all about the 401k at this point. And the feds are betting people won’t care how their 401k statements improved, but will only care that it has improved. They’re probably right for the time being but when it all comes tumbling down again, people will be even more pissed off the second time around. Fool me once, twice………thrice?

  62. Transor Z says:

    I maintain, with unshakeable conviction, that Matthew Lesko is the real manager of TARP and PPIP.


  63. Mannwich says:

    @Transor. LOL. That is fantastic. How did you find that?

  64. Transor Z says:

    He used to have spots on TV all the time. I actually do a pretty good impression of him after a few beers.

  65. vaughn says:

    “When economists talk more about morality than they do about numbers, I call bullshit.”

    Franklin411. Yours is easily the most disturbing comment in this thread.

  66. JungWhippersnapper says:

    Start shouting out and you can be labeled a right wing extremist, dedicated to a single issue such as opposition to abortion, immigration, or national financial reform by Homeland Security Secretary Janet Napolitano.

    This administration and the Beltway are holding a lot of trump cards.

  67. ben22 says:


    Yeah, that could def. play out that way but that tumbling down again will have to happen again soon, very soon. Still, the way I feel lately, saying I’m pissed off, that doesn’t even come close to what I feel about what has happened. It’s more than that for me. I don’t think most people are anywhere close to that level though. Maybe people here, but not the regular Joe out there.

    JG at GMO had a quote that I think will apply to the human behaivor as this moves forward.

    He said, when asked about what we would learn from all of this:

    In the short term a little, in the medium term a lot and in the long term… nothing.

    So, in order for the average person to really get pissed and demand a real change, not a feel good slogan, they need this to happen again in not such a long period of time. If it doesn’t play out that way, then every Wall Street firm that is left will drill into people’s minds that sometimes crisis just happen, and it’s part of the market cycle…. and we came back from it, we always do, etc. etc. etc.

  68. Todd says:

    J6P won’t care until he’s without a job, homeless, and hungry.

    With all of the gov’t programs setup, and interventions. He may not get there.

  69. Thatcher says:

    Keep this up Bazza and before we know it you will be a Nobel winner!

  70. paulyarbles says:

    Someone above wrote: “When economists talk more about morality than they do about numbers, I call bullshit.”

    What a crock of дерьмо.

    Newsflash! When economists talk about numbers they are talking about morality. It’s just not made explicit.

  71. DeDude says:

    The second part of the remarks from Stiglitz was actually also worth the read. Half of the stimulus package was wasted on taxcuts although we know that in a downturn, taxcuts have almost no stimulus effect (people save rather than spend the money when they are scared of the future). Why the heck did we have to waste half of a stimulus package that was already to small (0.8 trillion for a 2 trillion problem) on paying respect to the same failed ideologogs that had brought us into this mess.

  72. Transor Z says:

    franklin 10:54 am

    And don’t forget…letting the banks fail is not just a theoretical exercise. It would have very real consequences for millions of Americans. The aftershocks around the world would cause millions to lose their assets, millions to be thrown out of work, and probably tens of thousands of innocents would die.

    When someone who calls bullshit on lefty economists for moralizing launches into “TARP: Do it for the children!” moralizing, I call double-bullshit.

    Without being able to quantify for comparison’ sake the projected dislocations/destabilizations/fallout caused by the (a) TARP vs (b) Nationalization/Pre-pack BK options, you fall into the same trap you accuse Stiglitz of falling into. All you can give are just more spooky campfire stories to give the little ones nightmares.

    I think you have to take Stiglitz in the larger context, viz. the recent TARP COP report criticizing the administration for failing to account for why different historical (and successful) policy alternatives were not considered — suggesting at a minimum that a limited mindset is at play, if not an insider cartel mindset. I’m with Stiglitz that far. The ad hominem against Larry Summers and Wall Street insiders generally I can take or leave.

    Having said that, I will say that IMO you’re a big improvement over otto. ;)

  73. hbsjeff says:

    All – I have read this site, Mish Shedlock’s site, Krugman’s site, Minyanville, etc. for the past couple years and grow increasingly frustrated at what has been happening to our country.

    Barry had a comment, “I wonder what will happen if or when the public realizes the enormity of the theft that has taken place right out in plain view, before their very eyes. Don’t know? Don’t care? Sheeple? I simply don’t get the complacency . . .

    This is what has drove me to finally sign up to comment vs. read and remain passive/frustrated.

    My hypothesis is that most people who understand what is happening do not have an organized method to express their dissatisfaction, without coming across in a way that is easy to destroy the credibility of the person.

    We know from the original TARP that Congress does not listen, or rather that the government/bank PR would not have been able to take 95% negative response rate from congressional constituents around the country, spin it, and pass the flawed legislation anyway.

    There are enough folks: Stiglitz, Krugman, Shedlock, Ritholtz, etc. with the same basis issues with the direction things are going – but the splintered nature of the complaints and analyses is allowing for the power base to divide and conquer, discredit the argument, attack the person’s credibility, or just ignore and continue.

    What is needed is a way to get the view of the masses to be heard and not discounted.

    Open Question to All:

    Barry or others here: How do we get critical mass to be taken seriously about what is happening with these financial bailouts, transfer of wealth, etc. ? Blogging, interviews on Bloomberg, and other similar efforts are not working – or at least not working fast enough.

  74. DeDude says:

    flibby @ 10:28

    “The american tax payer isn’t as dumb as people think” and “opinion was running 300:1 against TARP”

    There is a true disconnect between those two sentences.

    You ask those people what the consequences of just letting the stupid institutions fall would have been, and you will see how amazingly ignorant, and prone to act on emotions, most people are. They have no clue about all the stuff that would have landed on and crushed them if their desire had been fulfilled. They don’t understand how their pensions, life insurances and jobs, are all dependent on a functional financial system. They don’t understand that perfectly healthy and profitable businesses can be forced to close down if credit is not available. They don’t understand what kind of an exsistencial crisis is imposed on an industrialized society if an instantaneous 25% unemployment rate occurs. All they can see is that some big bad Wall Street billionaires are getting some of their hard earned money.

    I certainly don’t agree with the way the TARP was implemented, but the only viable alternative discussed at that time (among all those 300:1’ers) was the idiotic idea of doing nothing, and punish the bad Wall Street people by letting it all collapse. My favorite solution was a lot better than TARP, but it was also so far to the left of the political balance in the Senate that I am glad nobody wasted time trying to get it done.

  75. Daffyorbugs says:

    It used to be that the unions owned some politicians, and were an organized forum for the “little guys” views. Now, the bankers own all the politicians; the politicians appoint the regulators, and the regulators
    oversee the bankers, who call the shots for the politicians.

    Until there is some organized voice with political power the average person won’t be heard.
    He’s gotta get up and go to work.

  76. insaneclownposse says:

    Seems to me that people are outraged and that is why Obama got elected. Most folks don’t give a crap what Stiglitz says – they are going to give the current administration time to try to sort out the mess the best that it can.
    I agree though that the plan probably will fail because the current team is the same team that is responsible for the mess in the first place. However, it’s too early to tell, maybe the plan will get some traction as confidence returns and the gears of finance start turning again? A lot of the problems stem from the crisis of confidence and I don’t think Stiglitz gets that part of it or believes in it.
    Anyway, if Obama fails, it opens the door for a third political party to start taking power.

  77. hotelwiz says:

    hbsjeff has nailed it in terms of action steps vs. clever wordplay in the comments forums of BigPicture, Mish, Krugman, CR, et al. Barry, Krugman, Stiglitz, and many others NOT in power have on a daily basis offered viable alternatives to the “of the TBTF, by the TBTF, for the TBTF” policies that are bleeding us of our present and future opportunities.

    What actions can be taken by similarly minded taxpayers, citizens, laid-off workers, barely scraping by small business owners, and thwarted students searching for funds?…in short, most of us. Barry? Anyone? Any community organizers out there who are not wholly sponsored by a network or flailing political party?

    Let’s measure the success of these blogs less in number of hits, and more via the metric of actionable goals.

    Or if not by blog, then where to go when the ears of Congress and the Executive are deafened to our pleas by the campaign cash ever-ringing in their ears?

  78. Daffyorbugs says:

    hotelwiz nails it. Can you organize something Barry?

  79. Pat G. says:

    “I wonder what will happen if or when the public realizes the enormity of the theft that has taken place right out in plain view, before their very eyes. Don’t know? Don’t care? Sheeple? I simply don’t get the complacency . . .”

    What complacency? Those clowns know that the vast majority of Americans do not agree with what they are doing through polls. They don’t fucking care. We started voting out the Republican party a couple of years ago. Has that worked? Dems/Reps, they are all the same. We need a third party founded on the principles written in the Constitution not one that simply pays lip service to it. When all this shit finally comes crashing down and we find ourselves not only in a depression (courtesy of the Reps) but an inflationary one (courtesy of the Dems), you can bet your sweet ass there will be change.